Argentine consumers see precipitous declines in spending as a result of the Milei reduction

The biggest employer in Argentina, small and medium-sized enterprises saw their spending fall 25.5% year-over-year in February, continuing a streak of double-digit declines.

As Argentina sinks further into recession due to President Javier Milei’s austerity measures, consumers have little choices for protecting themselves against spiraling prices.

Argentine business organization CAME released statistics on Sunday evening showing that spending at small and medium-sized enterprises (SMEs), the country’s biggest employer, fell 25.5% year-over-year in February, marking the third consecutive month of double-digit losses.

The South American nation’s shoppers have endured a whole year of triple-digit price increases. According to estimates from Buenos Aires-based broker Portfolio Personal Inversiones, real wages—incomes adjusted for inflation—have decreased 23% over the past three months, therefore they are now staying home.

The markets believe that Milei’s economic shock therapy is essential for addressing the country’s fundamental issues. In addition to releasing previously artificially restrained price pressures, it has contributed to yearly inflation exceeding 250 percent.

The actual economy, however, is bearing the brunt of Milei’s extreme policies. Despite a post-pandemic trend, government surveys show that employers plan to lay off more people than they hire in the next months. In its most current quarterly report on employment expectations, staffing giant Manpower Group ranked Argentina as the worst out of 41 nations.

As recession predictions pile up from Buenos Aires to Wall Street, investors are wondering how Milei will go from emergency measures to a long-term recovery plan in light of the consumer backlash.

The Argentine GDP will fall 2.8% this year, following a 1.1% decline in 2023, according to the International Monetary Fund.

Leave a Comment